China trade deal just the tonic for vitamin maker Blackmores

Vitamin maker Blackmores is anticipating big local jobs growth from Australia’s free-trade agreement with China.

Blackmores CEO Christine Holgate talking about how Australian-made vitamin manufacturers are set to benefit from the China-Australia FTA. Pictured at Blackmores in Warriewood, Sydney.

Leading vitamin and supplement maker Blackmores is anticipating significant local jobs growth will flow from Australia’s free-trade agreement with China, as the business prepares to expand its supply chain throughout the mainland.

Already a major beneficiary of China’s growing appetite for Australian-made healthcare goods, Blackmores is looking forward to competing more effectively, particularly throughout the retail pharmacy channel, as import tariffs are gradually removed over the next four years.

Chief executive Christine Holgate said various tariffs and duties currently added up to 45 per cent to the cost of some products sold into the Chinese market, which was “incredibly prohibitive” when competing on price.

As a result, much of the company’s sales into China so far have been through the country’s free-trade zones, a process that permits goods to be shipped to bonded warehouses and then sold through online channels to avoid tariffs.

However, the same concessions do not currently apply to goods supplied to bricks-and-mortar retailers.

Ms Holgate said the trade deal would mean all import tariffs — except for a 10 per cent value-added tax — would gradually be removed, creating significant ­opportunities for companies in the health supplement space.

“We know there’s high demand for our products, although predominantly sales to date are through the free-trade zones,” Ms Holgate said. “But not everyone shops on e-commerce.”

Despite the challenges, business in China helped to push the publicly listed Blackmores to a ­record profit last financial year, with Asia-direct sales jumping 26 per cent to $84 million.

However, the company suspects that the region could be worth as much as $150m to group sales, taking into account unprecedented buying in Australia by Chinese tourists, students and entrepreneurs — operating as agents or “daigou” — who then sell the products in China through ­social media and other online platforms. The company’s share price has soared, peaking at just over $150 earlier this month.

Blackmores has added 100 new jobs in support of its Chinese growth strategy over the past 12 months — taking staff numbers to 800 — and Ms Holgate said the trend would likely continue.

“I understand that there’s concerns about ChAFTA taking jobs away but my view is the more we can help Australian business to grow we will actually be protecting jobs and delivering more jobs here in Australia,” she said.